Gst is to be paid by service receipient under reverse charge mechanism as
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Answer:
Explanation:
Goods and Service tax, popularly known, as GST is the new tax regime that has replaced many of the current indirect taxes and
has remove the complexities of it. In India, earlier we had the tax system which was origin-based, and now under GST it is destination-based tax system.
It will replace a total of 17 taxes such as Service
Tax, VAT, Excise Duty, Counter Veiling Duty (CVD), SAD, Entry Tax, Purchase Tax etc. Central Government has enacted 4 GST
Bills until now,
to get GST implemented to the whole nation.
CGST (Central GST)
IGST (Integrated GST)
UTGST (Union territory GST)
Bill to compensate states.
A well-designed GST has not only eliminate cascading effect and double taxation but has also smoothened the functioning of
the business. It is projected that India will have an increased growth by 2% and will boost revenues for the government
because it will affect both manufacturing and service sector.
India is a country where there are organized, partly organized and unorganized sectors, which require continuous monitoring
for better tax compliance and coverage. To carry out this function smoothly, the government had introduced
REVERSE CHARGE MECHANISM.
Earlier, the reverse charge concept was only there in Service Tax and was applicable to only services and not for goods. Under GST Law, Government have notified
certain services and goods, on which GST is payable on the reverse charge basis.
What is Reverse Charge in GST?
It is a new concept that is introduced in GST in India, to increase tax revenues, coverage and compliance from partly or unorganized sectors.
Earlier goods were exempt from this scheme, now the collection of GST will increase tremendously.
In GST, the supplier will be liable to collect tax on goods and services provided. But the central government has the power to notify categories of supplies against which service recipient has to discharge the tax liability. Hence, all the provisions of the Act will now be applicable to the recipient of such goods or services as if he is the supplier of such goods or services.
When a person becomes liable to pay tax on the reverse charge, certain provisions like threshold exemption, time of supply, availing of input credit changes. There is a threshold limit for turnover aggregating to Rs.20 Lakhs for registration for normal tax payers but under reverse charge, there is no such limit. The person has to be registered under GST irrespective of the aggregate limit.
Also read about GST composition scheme.